FLORIDA BANKRUPTCY GUIDE
CHAPTER 7 VS. CHAPTER 13A plain-English guide for Florida residents. Lea esta guía en español.
Is Bankruptcy Something You Should Be Thinking About?
Bankruptcy is a legal process under federal law that lets people who cannot pay their debts either eliminate them or repay them on a manageable schedule, under court protection. It is not a moral failure and it is not the end of your financial life. For many Florida families it is the step that stops the lawsuits, garnishments and collection calls so they can rebuild.
It may be worth speaking with an attorney if:
- You have been sued by a creditor or a judgment has been entered against you.
- Your wages are being garnished or a bank account has been levied.
- You have missed mortgage payments or received a foreclosure complaint.
- Your car is at risk of repossession.
- You are borrowing to pay existing debts, or only paying minimums with no end in sight.
Chapter 7 and Chapter 13 at a Glance
| Chapter 7 | Chapter 13 | |
|---|---|---|
| What it does | Eliminates most unsecured debt | Repays some or all debt through a 3–5 year plan |
| Typical length | A few months | 3 to 5 years |
| Who qualifies | Must pass the means test | Must have regular income; debt limits apply |
| Your home | Protected if covered by exemptions; does not cure missed payments | Can stop foreclosure and let you catch up on arrears |
| Your car | Keep if payments are current and equity is exempt | Can restructure the loan in some cases |
| Non-exempt property | May be sold by the trustee | Generally kept; value is reflected in the plan |
Chapter 7: The "Fresh Start" Option
In a Chapter 7 case, a court-appointed trustee reviews your assets. Property protected by exemptions stays with you; non-exempt property, if any, can be sold to pay creditors. Most consumer Chapter 7 cases are "no-asset" cases, meaning everything the filer owns is protected. At the end, eligible debts such as credit cards, medical bills and personal loans are discharged.
The means test. To file Chapter 7 you generally must show that your income is low enough. The test first compares your average household income from the six months before filing to the Florida median for your household size. If you are above the median, a second calculation looks at allowed expenses to see whether you have meaningful disposable income. The median figures are updated periodically, so an attorney should run the numbers using the current tables.
Chapter 13: The Repayment Plan Option
Chapter 13 lets you keep your property and pay creditors through a court-approved plan lasting three years (if income is below the median) or five years (if above). You make one monthly payment to the Chapter 13 trustee. Chapter 13 is often chosen to:
- Stop a foreclosure and pay missed mortgage payments over time.
- Protect property that would not be fully covered by exemptions.
- Handle certain tax debts or support arrears in an organized way.
- File when income is too high for Chapter 7.
When the plan is completed, remaining eligible unsecured debts are discharged.
What Bankruptcy Usually Does Not Erase
Some obligations generally survive bankruptcy, including most child support and alimony, most student loans (except in limited circumstances), recent tax debts, criminal fines, and debts arising from fraud. An attorney can tell you how your particular debts are likely to be treated.
Florida Exemptions: What You Can Usually Keep
Florida's exemptions are set by state law and are among the most generous in the country:
- Homestead: A primary residence is generally protected regardless of value, within acreage limits (½ acre inside a municipality, 160 acres outside). Federal law can cap the protection for homes acquired within about 1,215 days before filing.
- Retirement accounts: Most qualified retirement plans and IRAs are protected.
- Wages: Earnings of a head of family are protected in many circumstances.
- Personal property and vehicle: Limited dollar amounts are protected; additional personal property protection may be available if you do not claim a homestead.
Exemption amounts and rules change from time to time, and how they apply depends on your facts. Always confirm with an attorney before filing.
Step by Step: What the Process Looks Like
- Consultation with an attorney to review your options — including alternatives to bankruptcy.
- Credit counseling course from an approved provider, completed before filing.
- Filing the petition. The automatic stay takes effect immediately in most cases.
- Meeting of creditors, a short session with the trustee a few weeks after filing.
- Plan confirmation (Chapter 13 only).
- Debtor education course, then discharge.
When to Get Legal Advice
Talk to an attorney before you transfer property, repay a family member, run up new credit, or empty a retirement account to pay bills. These actions can create problems in a later bankruptcy. It is also important to get advice quickly if a foreclosure sale date or wage garnishment is approaching, because timing can determine what can still be protected.
If you are not a U.S. citizen, ask how a bankruptcy filing may interact with your immigration case. Szabo Law Group handles both bankruptcy and immigration matters and can review them together.
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This guide provides general information about federal bankruptcy law and Florida exemptions. It is not legal advice, and reading it does not create an attorney-client relationship.